City of Mankato v. Barber Asphalt Paving Co.

• Decision Date: 04 December 1905
• Docket Number: 2,196.
• Citation: 142 F. 329
• Parties: CITY OF MANKATO v. BARBER ASPHALT PAVING CO.
• Court: U.S. Court of Appeals — Eighth Circuit

142 F. 329

CITY OF MANKATO v. BARBER ASPHALT PAVING CO.

No. 2,196.

United States Court of Appeals, Eighth Circuit.

December 4, 1905

A. E Clark and C. N. Andrews (C. O. Dailey, on the brief), for plaintiff in error.

Jared How (A. R. Pfau, A. R. Pfau, Jr., and Carl Taylor, on the brief), for defendant in error.

On February 21, 1902, the common council of the city of Mankato Minn., plaintiff in error, adopted a report of its committee on streets to the effect that public necessity required that Broad street, from Lincoln to Pine streets, should be paved with asphaltum, 30 feet in width, and that the street should be otherwise improved by curbing and guttering; and, pursuant to the requirement of the charter of the city, referred the matter to the board of public works. On March 7, 1902, the board reported back to the council that the proposed improvement was proper and advisable, and accompanied its report with a profile and specifications of the work. The council, on March 7th, adopted the report of the board, and by resolution directed the board to advertise for bids according to law. This was done. Bids were required to be made for doing the work 'according to plans, profiles and specifications on file in the office of the clerk of the board. ' On April 2d, the date specified in the advertisement for the submission of bids, the board met and opened the bids, but owing to a temporary restraining order next referred to, took no further action. On April 1st, one Diamond, a taxpayer, and owner of property along Broad street, instituted an action in a state court of competent jurisdiction against the city, its aldermen and the board of public works, in which, on April 17th, a restraining order was made as follows: From 'entering into any contract for the boulevarding, curbing, guttering or paving Broad street in the city of Mankato, or issuing the orders, bonds, certificates of indebtedness, or other obligations of said city, whereby any pecuniary liability will be incurred by, for, or in behalf of said city of Mankato, for any of said improvement which will necessitate the payment or expenditure during the fiscal year A. D. 1902, or any of the following fiscal years, of any of the current funds of said city whatever, save and except such as can be lawfully raised by special assessments made upon real estate and property benefited by said improvements other than real estate and property belonging to said city of Mankato. ' This restraining order was duly served on all the defendants in that case, on or prior to April 23d. The Barber Asphalt Paving Company, the defendant in error, was not a party to that action. This company was the lowest bidder for the work contemplated, and on April 23d a formal contract was entered into between it and the city for doing the work in accordance with the terms of the bid and the requirements of the plans, profiles, and specifications which were attached to and made part of the contract. The specifications upon which bids were solicited and received from all bidders (including the Barber Company) contained the following provision: 'Payments for said improvement shall be made not earlier than one hundred and twenty days (120) after the completion and acceptance by the board of public works of said work, out of moneys received from the assessment duly made for said improvement in accordance with the charter of said city, or such other moneys as may be set aside by the common council of said city for the payment of same, and if at the expiration of the said one hundred and twenty days after the acceptance of said contract there is not sufficient money in the treasury of said city applicable to the payment of said contract, certificates of indebtedness bearing interest at the rate of six per cent. per annum may be issued in payment of any sum due said contractor in accordance with the provisions of section 28 of subchapter 6, of chapter 47, p. 429, Special Laws of 1891 of the State of Minnesota. ' By reason of the restraining order in the Diamond Case the foregoing provision for making payment for the work, by resolution of the board, accepted by the Barber Company, was stricken from the specifications, and in lieu thereof the following was inserted in the formal contract, to wit: 'Payments to be made after the completion of the said work and acceptance by the board of public works out of money lawfully raised by special assessment upon real estate and property benefited by said improvement other than real estate and property belonging to said city of Mankato.'

The specifications contained the following provision: 'The entire work shall be finished by Aug. 1st, 1902. Time being an essential condition of the contract, the contractor shall be charged twenty dollars ($20) per day after the expiration of the contract time, and all expenses of engineering and inspection until the work is accepted by the engineer, and the amount will be deducted from the final estimate.'

The formal contract on this subject contained the following provision: 'It is understood and agreed that time is of the essence of this contract, and that the whole of said pavement, curbing, guttering, boulevarding, and other improvements shall be finished and completed to the acceptance and satisfaction of the board of public works of said city of Mankato on or before August 1, 1902, and that for each and every day the work herein contemplated shall remain incomplete and unfinished according to the terms and conditions hereof after the time above mentioned, the said party of the first part hereto shall and will pay to the said party of the second part hereto the sum of twenty dollars per day as the fixed and liquidated damages suffered and sustained by said party of the second part hereto by reason of and on account of such failure and delay * * * provided such failure or delay is not through unavoidable causes; the work at all times to be under the supervision of the city engineer of the party of the second part hereto.'

The specifications contained the following provision: 'The contractor will be required to keep the same in good and sufficient repair for a period of ten years from date of acceptance of the board of public works. * * * If during that period it is found that the pavement is defective from over-burning or improper mixing of material or any other cause, or that the work has been done in an unskillful manner, the contractor shall, at his own cost and expense, upon an order of the board of public works, or other proper authority, entirely remove any defective portion of the pavement, and replace the same to the satisfaction of the said board of public works, or other proper authority. ' The formal contract embodied this same provision with the addition of the word 'preventable' immediately preceding the word 'cause,' so that the clause of the contract read as follows: 'If during that period it is found that the pavement is defective from over-burning or improper mixing of material, or any other preventable cause, * * * the contractor shall,' etc.

On April 23d the contract, as made by the board of public works and the Barber Company, was unanimously approved by the city council. The Barber Company began its work under the contract in May, and satisfactorily completed it on August 1, 1902, as required. Diamond, on May 23d, filed a supplemental bill in which he alleged the making of the contract between the city and the Barber Company, certain facts concerning the indebtedness of the city, the variations made in the formal contract from the terms of the specifications, and prayed that the contract be declared void. The Barber Company was never made a party to this suit, but its counsel conferred with counsel for the city, were present in court at the trial and by permission of counsel for the city, were, on one occasion, heard by the court in argument, and fully understood the purpose and object of the suit. The Diamond Case was tried in June, 1902, and on July 16th the state trial court decided the issues in favor of Diamond. An appeal was duly prosecuted to the state Supreme Court, where, on February 27, 1903, the decree of the trial court was affirmed. 93 N.W. 911, 61 L.R.A. 448. On May 9, 1902, Lester Patterson, owner of property abutting Broad street between Warren and Lincoln streets, instituted suit in the state court against the Barber Company, the sole purpose and object of which was to restrain it from performing its contract for three squares on that portion of Broad street lying between Warren and Lincoln streets. A temporary restraining order conforming to the prayer of the bill was granted by the court. No charges were made in the bill assailing the contract as a whole, but only in so far as it contemplated the improvement between Warren and Lincoln streets. While this temporary restraining order was in force, Patterson, on June 30, 1902, filed his supplemental bill, making the city a party defendant and enlarging the scope of his action so as to assail the legality of the contract in toto. He charged substantially, all the facts found to have been charged in the Diamond Case and prayed a final decree declaring the contract null and void. The city filed its answer to the supplemental bill in due time, justifying the making of the contract. Not till April, 1904, did the Barber Company file its answer to the supplemental bill. It pleaded the facts substantially as found in the complaint in the case now before us, and further averred that on and prior to August 1, 1902, it had performed all the work as contemplated by the contract of April 23, and that in January, 1904, it had commenced this action in the court below to recover from the city. After an unsuccessful demurrer to the replication filed to this...